Franchise Update Magazine Issue IV, 2013 | Page 66

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By Michael Daigle and Gina Malandrino

Don’t Get Gamed!

Tread carefully with lotteries, sweepstakes, and contests

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odern technology, with all
its advantages, has made it
harder to capture consumers’ attention and easier for
consumers to bypass advertising messages. Television viewers use
DVRs and TiVo to fast-forward through
commercials, while paid services like On
Demand and XM/Sirius satellite radio
eliminate commercials altogether. So
how can a company effectively market
its business in this modern media world?
The answer for many companies is social
media, and for many, it’s pairing social
media with contests and sweepstakes.
The possibilities are endless and run
the gamut from traditional random sweepstakes drawings to popularity contests.
A system of doggy day care centers and
boutiques might, for example, devise a
Facebook promotion that allows people
to submit pictures of their dogs. Each
picture is added to the promotion’s page,
and anyone who “likes” the page can vote
on their favorites. At the close of voting,
the picture with the most votes wins a
prize. By requiring participants to “like”
the Facebook page, the franchisor builds
its database of people to whom it can
directly market. Simple, perhaps. Low
cost, definitely. But promotions like this
are regulated and care must be taken to
follow the applicable legal rules.
Lottery, sweepstakes,
or contest?
To get the best intended result while
not running afoul of applicable state
and federal laws, promotions must be
appropriately structured. Promotions
like these typically fall into one of three
categories, and the distinctions can be
critical.
• Lotteries. Lotteries, which are reserved
to the states, are generally characterized
by requiring a payment for the chance
to enter a random prize drawing. The
“payment” component can be tricky.
For example, customers of the doggy
day care system may be able to purchase

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products online and, while checking out,
be prompted to enter the promotion.
Because the entry occ \